(Published in Part - III Section 4 of the Gazette of India, Extraordinary)

TARIFF AUTHORITY FOR MAJOR PORTS

G.No.135 New Delhi, 7 April 2017

NOTIFICATION

In exercise of the powers conferred by Section 48 of the Major Port Trusts Act,
1963 (38 of 1963), the Tariff Authority for Major Ports hereby disposes of the proposal received
from Visakhapatnam Port Trust (VPT) for levy of additional cess for supply of Tarpaulins and
manpower for covering of dry bulk cargoes stacked in the vicinity of Visakhapatnam Port as in the
Order appended hereto.

(T.S. Balasubramanian)
Member (Finance)
 Tariff Authority for Major Ports
Case No. TAMP/34/2016-VPT

Visakhapatnam Port Trust --- Applicant

QUORUM

(i). Shri. T.S. Balasubramanian, Member (Finance)

(ii). Shri. Rajat Sachar, Member (Economic)

O R D E R
th
(Passed on this 8 day of February 2017)

This case relates to the proposal dated 15 June 2016 received from
Visakhapatnam Port Trust (VPT) for levy of cess for supply of Tarpaulins and manpower for
covering of dry bulk cargoes stacked in the vicinity of Visakhapatnam Port.

2. The main points made by VPT in its proposal dated 15 June 2016 are summarised
below:

(i). The dry bulk cargoes such as Coal, Iron ore, etc., which are being openly stacked
at various stack yards in the vicinity of the port are prone to dust emission
particularly during the heavy winds which is an environmental concern.

(ii). Visakhapatnam Port has undertaken various controlling measures to control the
dust emissions by sprinkling of water on stacks, on roads and especially covering
of tarpaulins of cargo stacks.

(iii). Out of the various environmental measures, covering of stackyards is being done
by the concerned handling agents of importers/ exporters. In spite of issuing
circulars by Traffic Department, it is observed that covering of stacks is not being
done regularly. Due to this, VPT has been receiving several complaints from the
nearby residential colonies. As an interim short-term measure, it has been
decided to cover all the dry bulk stacks with good quality of tarpaulins to prevent
emission of dust into the town of Visakhapatnam which is the prime concern of the
public. Therefore, in order to ensure covering of stacks always, VPT is taking care
to cover stacks with tarpaulins and to recover the charges from the concerned on
tonne basis.

(iv). Besides, the port is committed towards achieving Green Port position with barest
minimum pollution indices. Various measures have been taken by the port directly
and through BOT/PPT Operators in order to achieve the above objective in the
medium and long term measure. The short-term of covering all the stack of dry
bulk cargoes with the tarpaulins have been taken by Mormugao Port Trust and
has been reported successful and had been found to be an effective mitigative
measure for pollution control.

(v). In view of the above, VPT proposes to introduce an additional cess of `5/- per
tonne towards pollution control for coverage of stacks with tarpaulins. To take care
of the financial implications for this additional facility to be provided by the port and
the BOT/PPP Operators the cost per tonne for providing additional facility is
estimated as follows:
(a). Cost of Silpaulin or equivalent Tarpaulins of size
60’ X 40’ (20 Nos.).
And 60’ X 60’ (20 Nos.) of total quantity `4,24,576/-
11,149.59 sq.m at 120 GSM at a cost of `38.08
ps. per sq.m
(i). Average stock per sq.m 3 tonnes
(ii). Life of tarpaulin 1 year
 (iii). Total cargo to be covered with tarpaulins in a 11,149.58X8X3
year duly considering a dwell time of 40 days for
coal and number of turns of tarpaulins as 8 times
in a year.
2,67,590 tonnes
Therefore, cost of tarpaulin per tonne 4,24,576 / 2,67,590
`1.59/-

(b). Labour charges for the services `80,68,946/-

Therefore, labour charges per tonne `80,68,946/- /
2,67,590 tonnes.
`30.15
(c). Total (a) + (b) `31.74

3. The VPT has issued a circular no.567 dated 05 September 2015 in consultation
with all the port users and they in principle agreed to cover the stacks with tarpaulins and
requested the management to give a circular to the trade including BOT/PPP Operators.
Subsequently the VPT has issued a circular No.572 dated 30 September 2015 stating that VPT
proposes to TAMP for levy of cess of `5/- pet MT and levy the same in anticipation of approval and
authorised the BOT operators/stevedores/Handling Agents to charge a cess of `5/- per MT and the
cess will be levied on all dry bulk import and export cargoes. The BOT/PPP/Stevedores/Handling
agents were requested to take immediate necessary action to ensure coverage of all cargo stacks
with tarpaulins.

4. The above proposal has been worked out as cost of tarpaulin per tonne is `1.59/-
and the labour charges per tonne is `30.15 ps. However, VPT has indicated the trade vide
Circular dated 27.08.2015 the cost of coverage of tarpaulins is `5/- per tonne which is worked out
as follows:
(i). Average stock per sq.mtr. : 3 tonnes per sq.mtr.
(ii). Cost of tarpaulin per sq.mtr. : `38.08 ps.
(iii). Life of tarpaulin : 1 year
(iv). Dwell time (coal) : 40 days
(v). No. of turns of tarpaulin : 8 times in a year
(vi). Cost per tonne : `1.19 ps.
(vii). Labour charges for services : `4.51 ps. (Approx.)
(viii). Total : `5.77 ps. per tonne
(ix). Levy in the form of cess : `5/- per tonne

5. In view of the above, it is proposed to levy `5/- per tonne if the port users are
reluctant to cover their stacks with tarpaulins. Otherwise, VPT will cover the stacks with tarpaulins
and recover `1.59 per tonne towards tarpaulin covering and labour charges per tonne at `30.15 ps
on no profit and no loss basis. The VPT has requested to communicate the orders of this
Authority.
6. The VPT has submitted a copy of Minutes of the Meeting held on 27 August 2015
in the VPT Board Room regarding discussion about various Environmental issues with Coal
importers and their handling agents.

7.1. In view of information gaps observed in the VPT proposal, the VPT was requested
vide our letter dated 4 July 2016 to furnish information/ clarification, which was followed by
reminder dated 9 September 2016.

7.2. The VPT vide its letter dated 18 October 2016 has furnished its response.
A summary of the information/ clarification sought by us and reply furnished by
VPT is tabulated below:
Sl. Information/ clarification sought by Reply furnished by VPT
No. us
(i). The proposal of VPT is to levy cess It is to clarify that the proposal for revision of
for covering dry bulk cargo stacked in SOR was sent in December 2015, whereas as
vicinity of port with tarpaulins. This per the Policy for determination on Tariff for
 service appears to be an integral part
of cargo handling and cargo stacking
services for handling dusty dry bulk
cargo. The port has recently in its
general revision proposal, amongst
other items, proposed 50% increase
in the wharfage rate for all cargo
items including dry bulk cargo, and
300% increase in license (storage)
fee. The VPT to confirm and show
that such increase proposed by the
VPT in the cargo handling activity and
(which has been approved by the
Authority) does not capture this
expenditure which is an integral part
for cargo handling service for dry bulk
(dusty) cargo
(ii). The wharfage rate in the revised SOR
for some of the dusty dry bulk cargo
like thermal coal, iron ore.
(Conventional handling), limestone,
gypsum is `22.50/ tonne, `20.25/
tonne, `36.00/ tonne, `36.00/ tonne.
As against the said wharfage rate, the
VPT has proposed `1.59/ tonne,
towards tarpaulin covering charge
and `30.15/ tonne towards labour
charge aggregating to `31.74/ tonne if
port undertakes to cover dry bulk
cargo with tarpaulin. Such high rate
proposed (only for covering cargo
with tarpaulin) need to be adequately
justified when compared to the
revised wharfage rate for dry bulk
cargo.
(iii). The concluding para in the proposal
states levy of `5 / tonne is proposed if
port users are reluctant to cover their
stacks with tarpaulins. Otherwise,
VPT will cover and charge `1.59/
tonne and `30.15/ tonne. The
proposal in concluding appears to be
confusing. The proposal of VPT is
not clear.
(iv). The port has stated that it has issued
Circular No.567 dated 5 September
2015 and 572 dated 30 September
2015 to all port users for levy of cess
of `5/- per MT and authorised BOT
operators/ Stevedores/ Handling
Agents to charge the same on all dry
Major Ports, 2015, expenditure of the years
2011-12, 2012-13 and 2013-14 was considered
for arriving at annual revenue requirement in the
recent proposal for General Revision of Scale of
Rates. The proposal for General Revision of
Scale of Rates was sent by VPT in December
2015, whereas the proposal for Tarpaulins was
sent in 2016. The expenditure for covering the
stacks with Tarpaulins was not captured while
sending the proposal in December, 2015 for
revision of VPT SOR.
It is to state that to cover the stacks with
Tarpaulins by VPT, quotations have been
obtained for cost of Tarpaulins as well as labour
cost, as per which the cost of Tarpaulins has
been worked out to `1.59 ps. per tonne and
`30.15 ps. per tonne towards the cost of labour.
The same has been informed to the Trade during
PWC Meeting. During the discussions, one of
the trade firms/ stevedoring firms has informed
that M/s.Vizag Seaport Pvt. Ltd. has implemented
the covering of stacks with Tarpaulins on a trial
basis, wherein it was worked out to `5.00 per
tonne and VPT’s proposal for charging `31.64 ps.
per tonne is not at all justified. During the
Meeting held on 27.08.2015, the directions of
APPCB were intimated to the Stevedores/ PPP
Operators and other trade fraternity to cover
100% of the dry bulk cargo with Tarpaulins. The
Trade further reiterated stating that the proposed
charges of VPT @ `31.64 ps. per tonne is not at
all justified as it has worked out to only `5.00 per
tonne, if they cover it on their own. If the
situation warrants that VPT has to cover the
stacks with Tarpaulins, a rate of `31.64 ps. is to
be charged, in case the stacks are not covered
by the Stevedores. However, VPT allowed the
Trade to cover the stacks.
(a). It is to state that the situation which led to
accord such permission to collect `5.00 per tonne
to cover the stacks with Tarpaulins along with
detailed justification is furnished hereunder:
“Most of the dusty cargo stackyards are
maintained more than 6 meters height.
Tarpaulins were not provided for the stackyards
which are not provided with MDSS.”
(b). In spite of the pollution measures undertaken
by VPT, APPCB has further informed vide letter
dated 12.12.2014, that VPT failed to comply with
the directions of APPCB dated 16.04.2012 and
directed to show cause as to why action should
not be initiated against VPT under the provisions
bulk import and export cargo. In this
regard, the following points may be
clarified.
(a). As per, clause 5.7.2. and
5.7.3. of the Working Guidelines, to
Tariff Policy, 2015, the port is to
forward the proposal for notification of
rate for the new facility or a new
service to the TAMP at least 60 days
prior to the expected date of
commissioning of the new cargo
facility/ service. Simultaneously, with
the submission of proposal, the
proposed rate can be levied on an ad
hoc basis till the rate is finally notified.
It is, however, seen that the VPT has
issued the circular to all port users on
5 September 2015 to levy the cess of
`5 per MT, without filing the proposal
with TAMP. The VPT to clarify how
the approach adopted by VPT falls in
line with the clause 5.7.2 and 5.7.3 of
the Working Guidelines.
(b). As per the Section 42 (3) and
(4) of the Major Port Trust (MPT) Act
1963, the BOT operators authorised
by the Major Port Trust to provide
services listed in the relevant section
of the Act cannot charge or recover
any tariff unless it is notified by the
Authority in the Gazette of India. For
this purpose, BOT operator who is
governed under the Tariff Guidelines
2005 needs to approach the Authority
with a proposal seeking approval of
the rates. The VPT may please
explain as to how its circulars issued
on 5 September 2015 and 30
September 2015 authorising the BOT
operators to collect the levy of `5/
tonne is in line with the statute
position.
(c). As regard the PPP operator
governed under the tariff guideline of
2008 and 2013, the upfront tariff is
already approved by the Authority
based on which the VPT would have
invited bids and awarded the project.
The VPT is well aware that the
upfront/ reference tariff fixed under
tariff guidelines of 2008 and 2013 is
only subject to annual indexation at
the level prescribed in the relevant
guidelines. In case the VPT has
authorised any BOT / PPP operators
governed under 2008/ 2013
guidelines to levy the cess, such
authorization to charge levy will not
be in line with the guidelines position
and the Authority may not be in a
of Air (Prevention and Control of Pollution) Act,
1981 and Water (Prevention and Control of
Pollution) Act, 1974 and amendments thereof
and under the provisions of Hazardous Waste
(Management, Handling & Transboundary
Movement) Rules, 2008 and further directed to
attend hearing on 19.12.2014 failing which further
action will be initiated against VPT in the interest
of public health and environment.
(c). VPT is having large extent of land where the
land is allotted to various Stevedores for stacking
of the cargo for export as well as transportation of
the cargo from VPT to destination places. As the
areas allotted by VPT are not fully covered by
MDSS, the areas are a source for pollution
generation.
(d). VPT has also put its best efforts to procure
two Fog Canon machines and deploying the
same in the areas where the cargoes are
stacked. The issues regarding the steps to be
taken to mitigate pollution, has been discussed in
every PWC Meeting held by VPT on a monthly
basis and the Stevedores were instructed to
make arrangements for covering the stacks to
mitigate the pollution caused to the nearby
residents in the port vicinity as well as in the city.
In spite of the instructions given by VPT to the
Stevedores, the Stevedores expressed that they
have been putting their best efforts in stacking
the cargoes. However, to cover the stacks with
Tarpaulins, the cost is not in-built in their
Stevedoring Agreement had with various
importers/ exporters.
(e). It is also pertinent to mention that a case was
filed against VPT in the National Green Tribunal
(SZ) Chennai during April, 2015 by the Chaitanya
Sravanthi, an Organisation registered with
Societies Registration Act 21 of 1860, praying the
Hon’ble Tribunal to issue an Injunction order
restraining VPT not to operate any Coal cargo
whether by the importers or exporters out of its
unit at port area and also issue an order on
APPCB to take action against VPT for carrying
operations.
(f). The Task Force team constituted by APPCB
is monitoring the Port pollution regularly by
visiting VPT operational areas and stackyards.
They have been continuously mentioning in their
reports that VPT has not complied with the
directions on the coverage of dusty cargo stacks
with Tarpaulins. Further, since VPT operational
areas are near to the Airport, the stackyards are
clearly visible while the flights are taking off and
landing at Visakhapatnam. The Hon’ble Chief
Minister of Andhra Pradesh has been mentioning
the pollution of Port at various forums.
 position to ratify that action of the
VPT.
(v). The VPT to furnish a copy of the
Board Resolution approving the said
proposal of VPT.
(g). Since the situation warrants immediate
measures for covering the stacks with Tarpaulins
and the Trade is not taking any steps towards
this end, VPT has thought of covering the stacks
with Tarpaulins by engaging a Contractor and to
charge the same on the Stevedores on per tonne
basis and accordingly, the estimate/ working has
been done, wherein, the cost per tonne has been
worked out to `31.64 ps. and the Trade was
informed accordingly, stating that if the stacks are
not covered with Tarpaulins, VPT will take steps
and charge the Stevedores @ `31.64 per tonne.
(h). During the discussions one of the trade firms/
stevedoring firms has informed that M/s.Vizag
Seaport Private Limited has implemented on a
trial basis wherein it was worked out to `5.00 per
tonne and VPT charging @ `31.64 per tonne is
not at all justified.
(i). Since the situation has aggravated, the M.P.
of Visakhapatnam has personally visited VPT
and meeting was convened with the Chairman
and other officials of VPT and also with the Trade
fraternity on 27.08.2015.
(j). During the meeting held on 27.08.2015, the
directions of Andhra Pradesh Pollution Control
Board (APPCB) have been intimated to the
Stevedores/ PPP Operators and other Trade
fraternity to cover 100% the dry bulk cargoes with
Tarpaulins w.e.f. 25.09.2015.
(k). The Trade further reiterated, stating that the
proposed charges of VPT @ `31.64 per tonne is
not at all justified, as it is working out only to
`5.00 per tonne if they cover it on their own.
(l). Accordingly, to mitigate the dust pollution, a
decision was taken to cover all the dry bulk
stacks with Tarpaulins by the Trade. Then, the
Trade has requested that the coverage of stacks
with Tarpaulins will cost them for deployment of
men as well as materials for this purpose and the
cost was not under the Stevedore’s Agreement
entered with their importers/ exporters.
Therefore, a decision was taken to allow them to
collect `5.00 per tonne and they requested VPT
to take a decision to issue a Circular to collect
`5.00 per tonne for coverage of cargo with
Tarpaulins.
(m). Further, the BOT/ PPP Operators also
informed that huge stacks are accumulated in
their stacking areas as the cargo is stacked for
more than the free time as envisaged in the
Concession Agreement and the ground stock is
accumulating to 1.82 to 2.00 Million Tonnes and
thereby the infrastructure made available for
suppression of dust, such as MDSS, Sprinklers,
etc., are not able to cope up with the suppression
 of the dust and they are not in a position to incur
additional expenditure on account of covering of
stacks with Tarpaulins.

(n). Considering the gravity of the situation and

the urgent need to cover the stacks with
Tarpaulins to mitigate the dust pollution, it was
agreed to authorise the BOT/ Stevedores/ PPP
Operators to charge a cess of `5.00 per M.T. and
the cess will be levied on all dry bulk, import and
export cargoes. BOT/ PPP Operators/
Stevedores/ handling agents were requested to
take immediate necessary action to cover all
cargo stacks with Tarpaulins.
Had VPT not taken steps as mentioned above,
the situation which arose for Chennai Port Trust,
i.e., banning of handling of coal cargo by the
National Green Tribunal, may not be ruled out at
VPT.

(o). In view of the exigency of environmental

issues, in-principle sanction of Chairman/ VPT
was obtained since the said proposal is mutually
agreed by the Trade, the cost of coverage of
cargo with Tarpaulins. The Trade have been
notified through Circulars No.575 the cost of
coverage of Tarpaulins which includes labour
when it is performed by the Port Users. In case
the Port Users are reluctant or fail to cover the
Tarpaulin on bulk cargo stacks, VPT is left with
no option except to cover it, duly undertaking the
jobs of processing tender/ finalization, drawing
labour on permanent basis and keeping sufficient
buffer stock of Tarpaulins by the contractors and
the rate worked out to `1.59 ps. per tonne
towards the cost of Tarpaulins and `30.15 ps. per
tonne towards the cost of labour. However, VPT
preferred port users to cover the stacks by
themselves which worked out to `5.00 per tonne.

(p). The subject proposal was placed before the

Board in the Meeting held on 09.09.2016 and
Board ratified the action taken. Copy of the
Resolution is furnished.

7.3. The VPT has requested to approve the proposal in view of the directions of
APPCB to VPT to comply or else there is every possibility of stalling of bulk cargo handling
operations in view of environmental problems being faced by the population in the vicinity of port.
Further, it is to state that had VPT not taken steps as mentioned above, the situation which arose
for Chennai Port Trust, i.e., banning of handling of coal cargo by the National Green Tribunal, may
not be ruled out at VPT.

8.1. On perusing the information/ clarifications furnished by the VPT vide its letter
dated 18 October 2016, there were still some information gaps observed which were conveyed to
VPT vide our letter dated 8 November 2016. The VPT vide its letter dated 8 December 2016 has
furnished its response. A summary of the gaps observed by us and reply furnished by VPT are
tabulated below:
Sl. No. Information gaps observed by us Reply furnished by VPT
(i). It is seen that with reference to the points As regards issuance of circular no.567
mentioned in our letter dated 4 July 2016 dated 5.9.2015 and 572 dated 30.9.2015
 at para 2 (iv)(a) and (b), the port has not
addressed adequately in its letter dated
18 October 2016. Hence, the point made
therein are reiterated. Further, the point
mentioned in para 2(iv)(c) of our said
letter is also reiterated.
(ii). Further, in our letter dated 4 July 2016 at
para 2(iii), it was brought out that the
proposal of VPT in the concluding para
appears to be confusing and the port was
requested to make it explicit. This point
is also not sufficiently addressed by the
port. Hence, the point 2(iii) of our letter
dated 4 July 2016 is reiterated.
mentioned at para 2(iv) (a) and (b) of the
TAMP letter dated 4.7.2016, it is to
reiterate that a detailed explanation was
given at paras 5 to 19 of VPT letter dated
18.10.2016, wherein it was clearly
elucidated regarding the emergency
situation which arose due to continuous
monitoring by the Hon’ble Chief Minister of
Andhra Pradesh with regard to the
pollution at VPT, during various forums as
well as the emergency meeting held by the
Member of Parliament of Visakhapatnam,
who had personally visited VPT and
convened a meeting on 27.08.2015 with
Chairman, other officials of VPT and the
trade fraternity.
During the above meeting, it was
instructed to the Trade fraternity to ensure
100% coverage of all their dry bulk cargo
stacks with tarpaulins, w.e.f. 25.09.2015
and accordingly the circular mentioned
above was issued after the approval of
Chairman/ VPT. Further, during the VPT
Board meeting held on 09.09.2016 the
Board ratified the action taken, which was
also communicated to TAMP vide VPT
letter dated 18.10.2016 (para 20).
With regard to para 2(iii) of the TAMP
letter dated 04.07.2016, explicit
clarification was given at para 19 of this
office letter dated 18.10.2016, which
clearly stated as follows:
“In view of the exigency of environmental
issues, in-principle sanction of Chairman/
VPT was obtained since the said proposal
is mutually agreed by the Trade. After
approval of Chairman/ VPT, the trade have
been notified through Circular no.572 duly
authorizing the BOT Operators/
Stevedores/ Handling Agents to charge a
cess of `5/- per MT and the cess to be
levied on all dry bulk import and export
cargoes. The BOT/ PPP/ Stevedores/
Handling Agents were also requested to
take immediate necessary action to ensure
coverage of all bulk cargo stacks with
tarpaulins”.
Further, in case the Port users are
reluctant or fail to cover the bulk cargo
stacks with Tarpaulins, they were informed
that, VPT would be left with no option
except to cover it, by undertaking the jobs
of (1) processing tender/ finalisation, (2)
drawing labour on permanent basis & (3)
keeping sufficient buffer stock of
Tarpaulins by the contractors. The rate
worked out for the above is `1.59 ps/
tonne towards the cost of Tarpaulins and
`30.15 ps/ tonne towards cost of the
labour, thus accruing to a total of `31.74
 (`1.59 + `30.15). However, VPT preferred
the port users to cover the stacks by
themselves as the cost they would incur
would be `5.00/ tonne only and they were
also authorized to collect the same from
their principals vide the Circular No.572.

8.2. The VPT has reiterated that had port not taken the emergency measures
elucidated above as well as in its letter dated 18.10.2016, the situation which arose for Chennai
Port viz., banning of handling coal cargo, may not be ruled out at VPT also.

9. In accordance with the consultative procedure prescribed, a copy of the proposal

of VPT dated 15 June 2016 alongwith VPT letter dated 18 October 2016 was forwarded to the
concerned users/ user organisations seeking their comments. The comments received from the
users/ user organisations were forwarded to VPT as feedback information. The VPT has not
furnished its reply in spite of the reminder dated 26 December 2016.

10.1. A joint hearing in this case was held on 24 January 2017 at the VPT premises. At
the joint hearing, the VPT and users / user associations have made their submissions.

10.2. At the joint hearing, Visakhapatnam Stevedores Association (VSA) and the users/
user associations objected the proposal of the VPT to levy `31.74/ tonne, if the port has to render
the services of covering cargo by tarpaulin. Based on the demand made by users/ user
associations, the VPT agreed to withdraw the proposed rate. But, if trade does not do this activity,
the port desires that there has to be some mechanism to enforce it. Hence, if it is not done by
trade, port decides to get it done and recover the cost at actuals.

11. The proceedings relating to consultation in this case are available on records at
the office of this Authority. An excerpt of the comments received and arguments made by the
concerned parties will be sent separately to the relevant parties. These details will also be made
available at our website http://tariffauthority.gov.in.

12. With reference to the totality of information collected during the processing of this
case, the following position emerges:

(i). The proposal of the Visakhapatnam Port Trust (VPT) dated 15 June 2016 seeks
approval of this Authority for levy of cess for covering all dry bulk cargo stacked in
vicinity of port with Tarpaulins.

(ii). The VPT has cited the following main reasons for seeking approval of this
Authority for levy of cess by Stevedores/ Handling Agents/ BOT operators
authorised by the VPT for covering dry bulk cargo stacked in vicinity of port with
tarpaulins against levy of cess of `5 per tonne:

(a). The VPT is handling dusty cargos like Coal, Iron Ore, Fertilizers, Fertilizer
raw materials and Manganese Ore etc. All these duty cargos are
generating dust and creating pollution, which is hazardous to the life of
people living in the vicinity of port.

(b). In spite of issuing circulars by Traffic Department, the covering of stacks is

not being done regularly by the port users. Several complaints from the
nearby residential colonies are being made for creating pollutions.

(c). The Andhra Pradesh Pollution Control Board (APPCB), noted that VPT is
violating the directions of the APPCB issued from time to time and has
issued show case notice as to why action should not be initiated against
the port under the relevant Acts in the interest of Public Health and
Environment.

(d). The Task Force team constituted by APPCB is monitoring the Port
pollution regularly by visiting VPT operational areas and stackyards. They
have been continuously mentioning in their reports that VPT has not
 complied with the directions on the coverage of dusty cargo stacks with
Tarpaulins. Further, since VPT operational areas are near to the Airport,
the stackyards are clearly visible while the flights are taking off and
landing at Visakhapatnam.

(e). The Hon’ble Chief Minister of Andhra Pradesh has also stated that huge
uncovered coal and other duty cargo at VPT is prime reason for unrest of
the surrounding people. The Hon’ble M.P. of Visakhapatnam Constituency
also discussed about various environmental issues with VPT officials, coal
importers and their handling agents.

(f). A case has been filed against the VPT in the National Green Tribunal,
Chennai praying the Hon’ble Tribunal to issue an injunction Order
restraining the port not to operate any coal cargo and issue an Order to
APPCB to take action against VPT for carrying operations.

(g). A resident filed a complaint to Hon’ble Minister for Environmental and

Forest requesting to stay all the coal handling and connected activities
within port area of VPT within 48 hours from the date of receipt of
complaint, till the establishment of entire infrastructure and compliance of
statutory regulations.

It is in this backdrop, the VPT has filed the current proposal. The port has also
forwarded the minutes of meeting had by the port with the stakeholders wherein it
is recorded that all importers and exporters of bulk cargo present in the meeting
have agreed to the proposed rate of `5 per tonne by 25 September 2015.

(iii). The proposal of the port of June 2016 is in two parts. The Port in the proposal has
sought approval for the authorisation granted by the port in September 2015 to
Stevedores/ Handling Agent/ BOT operators/ PPP operators to collect cess of `5/
tonne for covering all dry bulk cargoes stacked in vicinity with Tarpaulins. The
other part of the proposal of the port of June 2016 seeks approval of this Authority
for the port to levy charge `31.74 / tonne comprising `1.59 tonne towards the cost
of Tarpaulins + `30.15 tonne towards cost of the labour in case the Port users are
reluctant or fail to cover the bulk cargo stacks with Tarpaulins, and port is forced to
undertake this activity. The port in many places has stated `31.64/ tonne instead
of `31.74/ tonne. As per the break up given by the port, arithmetically it works out
to `31.74/ tonne and hence the corrected figure is considered while analysing the
case.

The VPT vide its letter dated 18 October 2016 has furnished the information/
clarification sought vide our letter dated 4 July 2016. Subsequently, the VPT had
furnished further clarification vide its letter dated 9 December 2016 on few
information gaps which were not addressed by the port earlier. At the joint
hearing held in this case on 24 January 2017 whilst the Visakhapatnam
Stevedores Association (VSA) and the trade accepted the proposal of the port
authorising Stevedores/ Handling Agent/ BOT operators/ PPP operators to collect
cess of `5/ tonne for covering all dry bulk cargoes stacked in vicinity with
Tarpaulins, they strongly objected the proposal of the VPT to levy `31.74/ tonne, if
the port has to render the services of covering cargo by tarpaulin. The VSA
pointed out that the proposed rate of `31.74/ tonne to be collected by the port is
unrealistic and low. They have argued that the VPT has, for arriving at the
proposed rate, considered the life of tarpaulin to be 1 year whereas based on their
experience does not last for more than 3 vessels. According to VSA, if this
position is corrected, the rate works out to `120/- per tonne instead of `31.74 per
tonne proposed to be levied by the port. The port has justified its calculation
saying that the port envisages to use tarpaulin of 120 GSM whilst the stevedores
may be using lower GSM.

Ironically, it is seen from the position reported by the VPT that during the
discussions the port had with the trade, the trade stated that the proposed charges
 of VPT @ `31.64 per tonne is not at all justified as it has worked out to only `5.00
per tonne, if they cover it on their own.

Notwithstanding the above position, in view of the strong objection of the VSA and
the trade on the proposal of the VPT to levy `31.74/ tonne, if the port has to
render the services of covering cargo by tarpaulin and based on the demand
made by users/ user associations, the VPT at the Joint hearing withdrew its
proposal to collect `31.74 tonne. At the same time, the VPT has categorically
stated that the Stevedores/ Handling Agents/ PPP operators/ BOT operators
should cover dusty cargo with tarpaulin. If the trade does not do this activity, the
port has emphatically stated that there has to be some mechanism to enforce
discipline in the port which is mainly to control environmental pollution measure.
Hence, the port has proposed that in case the trade does not cover the dusty
cargo in the vicinity of the port with tarpaulin, the port will get it done and recover
the cost at actuals from the concerned.

(iv). Clause 5.7.1. of the Working Guidelines issued by this Authority to operationalise
the Tariff Policy 2015, stipulates the methods for tariff determination whenever a
specific tariff for a service/ cargo is not available in the SOR, of a particular port.
In that case, the concerned Major Port Trust can adopt tariff if any fixed for
comparable cargo/ equipment/ service in any other Major Port Trust, else file the
proposal for notification of tariff for the said new cargo/ equipment/ service with
reference to optimal capacity assessed following the principles of 2008 guidelines
or based on rated capacity or technical specification of service/ facility/ equipment.
If determination of tariff based on the above prescribed options is not possible,
then the Major Port Trusts can propose rates based on Cost plus 16% return
formula giving sufficient reasons.

From the cost details furnished by the port, it is seen that the total the cost per
tonne is worked out by port at `5.77 per tonne. The cost calculation does not
capture any return as the port does not envisage any capital cost for providing this
service.

The port has proposed the rate at `5 per tonne. It is to be seen that the proposal
of the VPT is mainly to curb environmental pollution created by handling of dusty
cargo at VPT. Moreover, the proposal filed by the port is after series of discussion
with the trade. The trade has agreed to the proposal of the port for collection of
`5/- per tonne for providing the service of covering dusty cargo with tarpaulin to
mitigate the environmental pollution in the port for the reasons stated in para 2
above. Moreover, the port had already issued circular in September 2015
authorising Stevedores/ Handling Agents/ BOT operators to cover dusty cargo
with tarpaulin and had also authorised them to collect `5/- per tonne for rendering
this service. The port has informed that M/s.Vizag Seaport Private Limited has
implemented on a trial basis wherein it was worked out the rate at `5.00 per
tonne.

The port has also drawn reference to the Mormugao Port Trust (MOPT) where
covering all stack of dry bulk cargoes with the tarpaulins as a short term measure
was initiated and reported to be successful and effective measure for mitigating
pollution. As rightly stated by the VPT, the MOPT has in the current general
revision proposal proposed dust suppression levy of `4 per tonne on all cargoes
excluding containers and liquid cargo handled at MOPT berths (excluding PPP
Operators) which was duly approved by this Authority.

In view of the above position and recognising that the covering of dusty cargo
stacks with Tarpaulins is to mitigate environmental pollution and is mooted in view
of serious observations by the APPCB and also recognising that the proposed rate
is agreed by the trade and has been approved by the VPT Board, this Authority is
inclined to endorse the proposal of the port for levy of fee of `5 per tonne leviable
by the stevedores and the handling agents for covering dry bulk cargo stacking in
the vicinity of the port with Tarpaulins. As regards the proposal of the port
 authorising BOT/ PPP operators to collect `5 per tonne for covering dry bulk cargo
stacking cargo with Tarpaulins, it is discussed in the subsequent paragraphs.

(v). (a). The port has issued Circular No.567 dated 5 September 2015 to all port
users authorising BOT/ PPP operators to charge cess of `5/- per MT on
all dry bulk import/ export of coal with effect from 25.9.2015. Subsequently
the VPT has issued another circular No.572 dated 30 September 2015
stating that VPT proposes to TAMP for levy of cess of `5/- pet MT and
levy the same in anticipation of approval. The VPT in the said circular has
authorised the BOT operators/ stevedores/ Handling Agents to charge a
cess of `5/- per MT on all dry bulk import and export cargoes.

(b). It is seen from the circular No.567 dated 5 September 2015 and 572
dated 30 September 2015 issued by the port, that the port has, apart
authorising Stevedores/ Handling Agents to levy cess of `5/- per MT, also
authorised BOT operators to charge the same for covering of dry bulk
import and export cargo with tarpaulin.

The port has stated that the tariff goes exorbitantly high if ports gives the
work of covering cargo with tarpaulin on contract. So the port felt that let
Stevedoring/ PPP operators/ BOT operators do the work of covering
cargo with tarpaulin themselves and, therefore, authorized them to collect
`5/ tonne by issuing a circular trade.

As per the Section 42 (3) and (4) of the Major Port Trust (MPT) Act 1963,
the BOT operators authorised by the Major Port Trust to provide services
listed in the relevant section of the Act cannot charge or recover any tariff
unless it is notified by this Authority in the Gazette of India. For this
purpose, BOT operator who is governed under the Tariff Guidelines 2005
needs to approach this Authority with a proposal seeking approval of the
rates. As regards the BOT operators governed under the tariff guidelines
of 2008 and 2013, based on the upfront tariff approved by this Authority
the VPT would have invited bids and awarded the project. The VPT is
well aware that the upfront/ reference tariff fixed under tariff guidelines of
2008 and 2013 is only subject to annual indexation at the level prescribed
in the relevant guidelines. The VPT was requested to explain as to how
its circulars issued on 5 September 2015 and 30 September 2015
authorising the BOT operators to collect the levy of `5/ tonne is in line with
the statute and the guideline position.

The port has clarified that earlier the Ministry of Environment (MOE) did
not insist to cover cargo with tarpaulin. Spraying water was sufficient.
Now, MOE is insisting to cover cargo with tarpaulin. The upfront/
reference tariff sought by the port at the relevant point of time in the past
did not envisage covering of cargo with tarpaulin as this is the requirement
insisted by MOE now which was not there earlier as reported by the port.
This position is relied upon by this Authority.

The port has stated that considering the gravity of the situation and the
urgent need to cover the stacks with Tarpaulins to mitigate the dust
pollution, the port has authorised the BOT/ PPP Operators to charge a
cess of `5.00 per M.T. on all dry bulk, import and export cargoes for
covering it with tarpaulin. The port has categorically stated that had VPT
not taken steps as mentioned above, the situation which arose for
Chennai Port Trust, i.e., banning of handling of coal cargo by the National
Green Tribunal, could not be ruled out at VPT.

In view of the strong reasons cited by the port and also for the reasons
brought out in para 12(ii) above, this Authority being a national level
Regulatory Body cannot ignore the environmental concern voiced by the
 other regulatory body on the Environment. In fact, the proposal mooted
by the port is a measure to control environmental pollution for various
reasons cited by the port and also recognising that the proposal is after
consultation with the trade and is approved by its Board, this Authority
approves the proposal of the port authorizing the BOT operators to collect
`5/- per tonne for covering dry bulk cargo with tarpaulin. This Authority
while approving the said proposal of the port categorically makes it clear
by way of abundant caution that this should not be cited as a precedent by
any other Major Port or BOT operators governed under the 2008
guidelines and 2013 guidelines for seeking tariff for any other item or
service for whatsoever reasons. This proposal of the VPT for coverage of
the BOT operators for levy of `5 per tonne is approved solely to address
the environmental issue raised by the APPCB.

(c). Recognising that the proposal filed by port is after detailed discussion with
the trade to take care of environmental issues in the port and the trade
has given consent on the proposal of the VPT authorising Stevedores/
Handling Agents, BOT operators to collect `5/- tonne for covering dry bulk
cargo with tarpaulin and also that the proposal of the VPT has been
approved by the Board of Trustees, this Authority is inclined to approve
the proposal submitted by the port. This Authority does not go into the
details about the mutually agreed conditions and situation under which the
rate has been agreed by the concerned parties. Any matter which may
arise on this account will be for the port and the concerned parties to
resolve mutually between themselves.

(d). As per clause 5.7.2. and 5.7.3. of the Working Guidelines to the Tariff
Policy, 2015, the port is to forward the proposal for notification of rate for
the new facility or a new service to this Authority at least 60 days prior to
the expected date of commissioning of the new cargo facility/ service.
Simultaneously, with the submission of proposal, the proposed rate can
be levied on an ad hoc basis till the rate is finally notified. It is, however,
seen that the VPT has issued the circulars to the concerned port users on
5 September 2015 and subsequently a modified circular in 15 September
2015 authorising the Stevedores/ Handling Agents/ BOT operators to
immediately cover the dry bulk cargo with tarpaulin and levy the cess of `5
per MT for that service.

However, the VPT approached this Authority with the proposal only in
June 2016 instead of filing the proposal immediately at that point of time.
When requested the VPT to clarify how the approach adopted by VPT
falls in line with the clause 5.7.2 and 5.7.3 of the Working Guidelines, the
VPT has cited various reasons and exigency in view of which the port has
issued the circular to the trade. The port has further stated that Trade has
requested the port that the coverage of stacks with Tarpaulins will cost
them for deployment of men as well as materials for this purpose and the
cost was not under the Stevedore’s Agreement entered with their
importers/ exporters. Therefore, the port has stated that port has issued
circulars allowing them to collect `5.00 per tonne. The port has sought
ratification of its action of authorizing stevedores/ handling agent/ PPP
operator to charge `5/ tonne in emergent circumstances. In view of the
emergent circumstance brought out by the port and recognising that the
rate is arrived after discussion by the port with the concerned parties and
agreed by them, this Authority ratifies the above action taken by the port
which is mainly to control environment pollution.

(vi). As stated earlier, VPT categorically stated that the Stevedores/ Handling Agents/
PPP operators/ BOT operators should cover dusty cargo with tarpaulin for which it
has sought approval of `5/ tonne. If the trade does not do this activity, the port has
emphatically pointed out there has to be some mechanism to enforce this
 discipline in the port which is mainly to control environmental pollution measure.
Hence, the port proposed that in case the trade does not cover the dusty cargo in
the vicinity of the port with tarpaulin, the port will get it done and recover the cost
at actuals from the concerned agency.

Recognising that the proposal of the VPT to recover the cost at actuals is only to
enforce discipline and it is only to act as a deterrent so that the Stevedores/
handling agents/ BOT operators provide this service, this Authority approves the
same.

13.1. In the result, and for the reasons given above, and based on a collective
application of mind, this Authority accords approval to insert the following provision in the existing
Scale of Rates of VPT at Section 4 – Cargo related charges as Section 4.8:

“4.8. Levy for Covering Dusty Cargo within the vicinity of the port with Tarpaulin:

4.8.1. Levy of `5 per tonne by Stevedores/ Handling Agents and BOT operators
authorised by the VPT for undertaking the service of covering all dusty import and
export cargo within the vicinity of the port with Tarpaulins.

4.8.2. If Stevedores/ Handling Agents and BOT operators authorised by the VPT do not
cover all the dusty import and export cargo within the vicinity of the port with
Tarpaulins, then the port will get it done and recover the actual cost of covering all
dusty import and export cargo with Tarpaulins from the concerned.”

13.2. The Authority ratifies the action of the port of authorising stevedores/ Handling
Agents and BOT operators to collect `5 per tonne from the date of levy in terms of the circular
issued by the port to the trade in this regard.

13.3. The VPT is directed to amend the existing SOR suitably.

(T.S. Balasubramanian)
Member (Finance)
 SUMMARY OF THE COMMENTS RECEIVED FROM THE PORT USERS/ USER
ORGANIZATIONS AND ARGUMENTS MADE IN THIS CASE DURING THE JOINT HEARING
BEFORE THE AUTHORITY

F.No. TAMP/34/2016-VPT - Proposal received from Visakhapatnam Port Trust

(VPT) for levy of additional cess for supply of
Tarpaulins and manpower for covering of dry bulk
cargoes stacked in the vicinity of Visakhapatnam Port
– Reg.

A summary of the comments received from users/ user organisations is given

below:
Sl. No. Comments received from users/ user organisations
1. Visakhapatnam Stevedores Association (VSA)
(i). VSA strongly object for the calculation basing on which VPT has proposed `1.59 ps
per tonne towards tarpaulins and `30.15 ps per MT towards labour charges for
covering the tarpaulins of the stacks as the same is not at all realistic.
2. Steel Authority of India Limited (SAIL)
(i). SAIL has stated that in various Port Working Committee meetings, VPT had intimated
port users regarding a case filed in National Green Tribunal at Chennai on coal
handling operations of VPT, concern of various Government officials including CM of
AP&MP of Vizag on the pollution control measures of VPT etc.
(ii). All port users were advised by VPT that covering of all dry bulk cargo with tarpaulins is
mandatory and that in case VPT takes up the job the cost would be very high. SAIL
was advised that all BOT operators/ Stevedores would cover the dry bulk cargo with
tarpaulins and all importers would pay an additional amount of `5 per ton to their
cargo handlers, since the continued handling of dry bulk cargo at VPT is at stake.
(iii). Considering the situation, SAIL has no option, but to conform to the circular issued by
VPT in this regard, and we have been making a payment of `5 per ton to the BOT
operators/ Stevedores handling SAIL cargo.

2. A joint hearing in this case was held on 24 January 2017 at the VPT premises. At
the joint hearing, the VPT and users / user associations have made the following submissions:

Visakhapatnam Port Trust

(i). The Andhra Pradesh Chief Minister whenever he comes to the Vizag, expresses
concern why cargo is not covered with tarpaulin as it leads to environmental
pollution. Moreover, we got notice from the Andhra Pradesh Pollution Control
Board also.

(ii). We had serious discussion with trade before filing the proposal. The tariff goes
exorbitantly high if we give the work of covering cargo with tarpaulin on contract.
So we felt let Stevedoring/ PPP operators/ BOT operators do the work of covering
cargo with tarpaulin themselves. We, therefore, authorized them to collect `5/
tonne by issuing a circular trade.

(iii). We have feedback that `5/ tonne is reasonable.

(iv). `31.74/ tonne is only to cover the dusty cargo in case the stevedores/ handling
agents do not cover cargo with tarpaulin and the port is forced to do it. It is only
an indicative ceiling rate. It is a ceiling rate. If the contract rate is less, we will
levy reduced rate.

(v). `5/ tonne is a mutually agreed rate. `31.74/ tonne is proposed only if port is
required to do it forcefully.

(vi). Earlier the Ministry of Environment (MOE) did not insist to cover cargo with
tarpaulin. Spraying water was sufficient. Now, MOE is insisting to cover cargo
with tarpaulin.
(vii). If trade does not cover with Tarpaulin, Andhra Pradesh Pollution Control Board
(APPCB) sends notices to the port. Trade should do this to comply with the
environmental pollution control measures. If trade does not do, there has to be
some enforcement. Else port will get notice from the APPCB. We should not
have problem like Chennai port. If stevedores / handling agent does not do it, port
will be forced to undertake this activity. We will give it on contract basis.

(viii). We need ratification of the action of port authorizing stevedores/ handling agent/
PPP operator to charge `5/ tonne. TAMP is requested to ratify this action of the
port done in an emergent circumstances.

(ix). In view of objection from trade to the proposed rate of `31.74/ tonne, we agree to
withdraw it. We want the trade to cover dusty cargo with tarpaulin. If trade does
not do, there has to be some mechanism to enforce it. Hence, if it is not done by
trade, port will get it done and recover the cost at actuals. We modify our proposal
to that extent.

(x). Proposal is not to earn money. It is for compliance of environmental issue.

Visakhapatnam Stevedores Association (VSA)

(i). The proposed rate of `5/ tonne is ok. We are ok with it.

(ii). Half of our principals do not pay `5/ tonne, though port has issued circular to
trade.

(iii). If VPT renders the service, the rate proposed is `31.74 per tonne. Port has taken
life of Tarpaulins as 1 year. It does not last for more than 3 vessels based on our
experience. `31.74/ tonne proposed by VPT is unrealistic and low.
[Traffic Manager, VPT – We are using 120 GSM Tarpaulins. Stevedores may be
using lower GSM]

(iv). Covering cargo with Tarpaulin will not be effective to control dust.
[Chairman, VPT: People in surrounding area are happy after this practice is
started].

*****